Wenzhou to legalize private financing
china.org.cn / chinagate.cn, February 18, 2014 Adjust font size:
Wenzhou, a southeastern Chinese city known for its small-and-medium sized private businesses, will be the first city in the country to legalize private financing, the Economic Observer newspaper reported.
The regulations -"Administration Regulations on Private Financing in Wenzhou" and "the Specific Measures for Implementation"- which will be ratified on March 1, represent a milestone in the country's financial market, and in particular, in the private sector.
According to the regulations, people will be required to report their loans from private financing if they have a single loan of more than 3 million yuan (US$494, 700), if the balance of the money borrowed exceeds 10 million yuan or if they are borrowing from more than 30 lenders.
Ding Zunian, director of the Legal Committee of National People's Congress (NPC) in Zhejiang Province, welcomed the regulations, saying it is a wise move, which will help to make hazardous and chaotic "shadow banks" more transparent.
According to the regulations, the local government will monitor loans. "The legislation will encourage some businesses, while constraining others with high risk," said Yu Qian, deputy director of the financial office in Wenzhou.
"For those who fail to report loans when they are required to, our department will send out warnings and even give legal punishments," Yu said.
